This article gives an insight into this problem that has been present for a few years now - the article is from 2018
caveat emptor
蝉辞耻谤肠别听
AN INCREASING number of people have got in touch with me recently complaining that the Land Registry has overcharged their Property Transfer Fees when they attend Land Registry offices to transfer the Title Deeds to the property they purchased to secure its legal and undisputed ownership.
In Cyprus, Property Transfer Fees are the local equivalent of the Stamp Duty Land Tax (SDLT) paid by someone buying property in England and Northern Ireland, the Land and Buildings Transaction Tax (LBTT) in Scotland and the Land Transaction Tax (LTT) in Wales 鈥� and like the property transaction taxes levied in the UK, Cyprus鈥� Property Transfer Fees are based on the market value of a property at its date of purchase.
The date on your contract of sale will be accepted as its date of purchase (assuming your contract was stamped and deposited at the Land Registry.) If your contract was not deposited the Land Registry may ask for payment receipts, utility bills, etc. to confirm its purchase date.
Problems in Cyprus arise because the Land Registry is required (by law) to assess the market value of a property at its date of purchase which, in an increasing number of cases according to the reports I receive, is more than the purchaser actually paid for the property.
In 20 years of advising and helping those with property issues I have only heard of one single case where the Land Registry valued the property at less than the purchaser actually paid. And in another case, where the Land Registry admitted mistakenly overcharged the purchaser, it transpired that their staff had wrongly taken the uncovered area of his property to be part of its covered area.
The Land Registry maintains historic records of property prices and it鈥檚 often reported that they use these records to assess a property鈥檚 market value. However, this is only part of the story; the Land Registry鈥檚 valuation process is shrouded in secrecy and it will not advise those who challenge their valuation how they reached their figure.
Recently purchasers who bought identical properties on the same development at identical prices within days of each other found themselves paying different Property Transfer Fees. And how the Land Registry assesses the market value of a property located where there no similar properties were sold for many years is a mystery.
In a recent case when a Cypriot examined the Title Deed he鈥檇 received from the Land Registry he discovered that the Land Registry had mistakenly registered his neighbour鈥檚 property as his.
The Land Registry is not as 鈥榠nfallible鈥� as some may wish believe.
Why the discrepancy?
This is where the infamous 鈥榖rown envelopes鈥� come into play. Some vendors come to an arrangement with purchasers whereby they under-declare the sale price in the purchase agreement and receive the balance in cash from the purchaser. The vendor鈥檚 objective in doing this is to reduce their Capital Gains Tax liability and it will also reduce the Property Transfer Fees paid by the purchaser.
The Land Registry procedures attempt to reduce this tax evasion. But these processes and staff are not without problems and those completely innocent of attempting tax evasion often end up paying for the misdemeanours of others.
Challenging Land Registry valuations
You can try reasoning with the Director of the Land Registry office.
One purchaser who challenged the market valuation was advised by Land Registry staff that properties in the area were being revalued because the construction of a new marina and a high-end development had recently been announced. The fact that these announcements were made several years after he purchased the property and had no bearing on its market value at its date of purchase was irrelevant. (The Land Registry鈥檚 market value of his property was 鈧�50,000+ more than he actually paid for it.)
If you get nowhere reasoning with the director of the Land Registry office, you can take the matter further by getting the property valued with聽 a report on how the valuation was assessed by a suitably qualified valuer such as a RICS Chartered Valuation Surveyor or a member of the Cyprus Association of Valuers and Property Consultants .
Your written objection together with the professional valuation has to be submitted to the Land Registry within around 40 days of its valuation.
This may result in the Land Registry reviewing its assessment of the property鈥檚 market value. However, there is no obligation on the Land Registry to accept the professional valuation or provide you with a written report supporting its own valuation. Furthermore the Land Registry鈥檚 re-assessment may result in a higher valuation and higher transfer fees.
Your lawyer may also apply to the court, but even if the court decides in your favour it may cost you more (鈧�3,000 鈥� 鈧�4,000) than the excess Property Transfer Fees demanded by the Land Registry.
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